The Commission has obtained Final Judgments enjoining ten of the twelve defendants in this action from future violations of the registration and antifraud provisions of the federal securities laws. The Honorable Mariana R. Pfaelzer, United States District Judge for the Central District of California, entered Final Judgments against Defendants Richard C. Reining, Michael R. Tompkins and Joseph L. Hill on March 1, 2001, and against Stephen R. Rawlings on March 8, 2001. The Honorable Manuel L. Real, United States District Judge for the Central District of California, entered Final Judgments against Defendants David J. Naughton, Ronald L. Gaiser, Mark R. Avila and Stephen R. Keenum on March 13, 2001, and against Adam E. Peck and Raffi T. King on March 20, 2001. Reining, Tompkins, Hill, Rawlings, Naughton, Gaiser, Avila and Keenum each consented to the entry of a permanent injunction without admitting or denying the allegations in the complaint. Default judgments were entered against Peck and King for their failure to answer the Commission's complaint.

Each of the Defendants was permanently enjoined from future violations of the securities registration, antifraud and broker-dealer registration provisions of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Final Judgments order each Defendant to pay disgorgement (Reining - $766,414; Tompkins - $46,500; Hill - $43,987; Rawlings - $301,934; Naughton - $327,998; Gaiser - $97,200; Avila - $444,042; Keenum - $353,714; Peck - $306,968; King - $374,942) in addition to assessing $110,000 third tier civil penalties against Peck and King. Disgorgement and prejudgment interest were waived and civil penalties were not assessed against Hill, Rawlings, Naughton, Gaiser and Avila based upon their demonstrated inability to pay. Prejudgment interest and all but $45,000 and $25,000 in disgorgement were waived against Reining and Tompkins, respectively, and civil penalties were not assessed against them based upon their demonstrated inability to pay.

The Commission's complaint alleged that the Defendants failed to disclose the actual commissions and overrides received by them in connection with their sales of the unregistered securities of Papa Holdings, Inc. and/or four of its restaurant subsidiaries: Ponzu V, Inc., Ponzu VI, Inc., Express 1, Inc. and Papa Ex. 2, Inc. Papa Holdings and the restaurant subsidiaries, operating out of offices in Woodland Hills, California, raised over $21 million from approximately 1,300 investors nationwide from November 1995 to January 1999. The restaurant subsidiaries each raised money purportedly to open a "Papashon" or "Papason Express" restaurant, but instead used the money to pay undisclosed commissions and pay for losses incurred by existing Papashon restaurants. None of the restaurant subsidiaries ever opened a restaurant and existing Papashon restaurants in Pasadena, Beverly Hills, Encino and Long Beach, California, each closed in 1999.